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Mortgage Score Understanding

Established Member

Mortgage Score Understanding

Hi forum, I need a little help understanding the different scores I'm seeing..

 

I applied for a mortgage a couple weeks back and got a dreaded denial. I know my credit history has been shaky (pre 2014) but my FICO has been steady in the 640 range. I spoke with the mortgage broker (who works for the preferred lender for the new build home) and she indicated my mortgage score was 527!

 

I was taken aback to say the least. But now that I've done some research I can see why my mortgage score is lower than my FICO scores. I had a total disregard for student loan payments for quite some time. First I just couldnt get a job post college so deferments and forebearances were my friend. I missed a couple forebearance requests and that killed my payment history. Other than student loans, all other negative history has been deleted. I have a few open credit cards that this forum has helped me selectively choose for rebuilding credit.

 

Now, I paid for the scoring models here on myFICO and looked at the different scores. According to myFICO, my mortgage score ranges from 558 - 630 between the three credit agencies.. my question is why??? All of my reports practically have the same history in terms of installment loans and credit card utilization ranges. Im confused.

Any help understanding this would be great!

2 REPLIES
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Valued Member

Re: Mortgage Score Understanding

Are you sure all the balances are reporting the exact same thing?  Transunion for some reason is still reporting a $4000+ balance on one of my installment accounts that I paid off in August.  They take forever to update their accounts.  So double check the balances.  Also, do they all have the same # of inquiries?  Does one have more inquiries than the others?  Are they recent?

 

Hopefully you purchased the 3 credit reports from MyFico.  If so, you will see that each of the credit reporting agencies (CRA) use different mortgage scoring models.  

 

Equifax uses FICO Score 5, Experian FICO Score 2, and Transunion FICO Score 4.  Hence, the mortgage company will use the median score.

 

For example; mines are 760, 800, and 767, respectively.  The mortgage company will use 767.

 

I hope I answered your questions.  If not, someone else will surely chime in.

 

ex-ArmyWifeMBA

Message 2 of 3
Moderator

Re: Mortgage Score Understanding

The problem is even "practically have the same history" is not the same as identical history.

 

Even it was line item and detail identical (nearly impossible with how lender / bureau reporting works unfortunately especially when talking older FICO models where differences between bureau scores are a common lender complaint) there could still be a swing.

 

ArmyWifeMBA gave a good explanation; I'd add to that in the Experian score is a different version altogether than the EQ/TU ones and does behave a bit differently in some respects, but it's sort of moot: the design goal of FICO was to have the scores for a given algorithm version and industry option be within +/- 30 points of each other.  Mine were pretty close to that range, 700, 721, 731 but EQ was my worst score and I've pretty much simply reached the conclusion that EQ hates me and my file for some reason, and an opaque reason at that.

 

Focus on prettying up your file as much as possible if your revolving utilization isn't on point, less tweaks you can do installment wise with your student loans and that only effects EX anyway (one of the differences mentioned earlier) and then re-check scores.  Almost all the mortgages underwritten in the US use the same scores, but in theory if the preferred/captive lender is portfolioing the loans, they might use something else though it's a bit doubtful.




        
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